From: JALopezPA@aol.com
Sent: Sunday, October 05, 2003 10:12 AM
To: rule-comments@sec.gov
Subject: sr-nasd-98-74
TO Whom It May Concern:
The purpose of this comment is to oppose the NASD's proposed amendment to
Rule 3110[f]. The amendment would include subsection [f][4][B], allowing
enforcement of a choice of law provision in arbitration. As an attorney, I
represent investors in pursuit of claims against broker dealers and therefore
I have considerable appreciation as to the impact of this proposal.
The amendment allows brokerage firms located in New York or which are defending
claims arbitrated with the New York Stock Exchange or which involve securities
traded in New York to potentially impose New York law on citizens of the other
states and other countries simply by including an apparently innocuous choice
of law clause in a new account agreement.
This is a critical issue to investors with claims in arbitration. Unlike most
states, the state of New York has not adopted the Uniform Securities Act; and
therefore, if the amendment is adopted, investors from other jurisdictions may
be deprived of the protections afforded by their state laws. These include
statutory claims for misrepresentation and omission against all sellers and
control persons. While these claims may be available under federal law, the state
laws generally have a longer statute of limitations and do not allow many of the
defenses which have been raised federally. The state laws also provide for attorney
fees which are not available under New York law or in federal statutes.
Not only does New York not have a securities law which can be enforced by investors,
there is case law in New York which may limit investor remedies under the common law.
The important issue is that investors are entitled to the protections available under
their state laws. National brokerage firms make the economic decision to operate in
a given state. They should not then be allowed to sneak a choice of law clause into
a customer agreement that deprives customers of their rights in their own jurisdiction.
The purported objective of the NASD is to protect investors. This proposal does the
opposite. It protects the industry. The fact that the proposal makes the amendment
retroactive confirms its anti-investor bias.
For these reasons, I respectfully request that the rule be rejected. Please feel
free to contact me if you have any additional questions.
Sincerely,
Jorge A. Lopez, Esquire
Jorge A. Lopez, P.A.
901 Ponce De Leon Boulevard
Suite 304
Coral Gables, Florida 33134
Telephone: 305-445-9429
Facsimile: 305-445-9427
E Mail: jalopezpa@aol.com
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